Thursday, May 01, 2008

Is the future of TV on the Web?

New episodes of "The Simpsons" are among Hulu.com's most popular TV shows.

(CNN) -- The future of television is changing before our eyes, as media giants scramble to stake their claims in the wilderness of Internet video.

Major studios, including Fox, NBC Universal, and Warner Bros. are moving quickly to establish Web sites for their premium video titles, in hopes of grabbing a growing audience of online video viewers.

It's an exciting time for couch potatoes and mouse potatoes alike, because nobody knows exactly how big audiences will consume video entertainment in the not-too-distant future -- whether it's on a mobile device, a laptop, a wall-mounted screen or something that hasn't been invented yet.

"Historically, the winners are the ones who embrace change," said Jason Kilar, CEO of Hulu.com, which was launched March 12 by the owners of Fox and NBC Universal. Tmeline: A history of online video »

He should know -- Kilar cut his teeth pioneering Web commerce at Amazon. Now, he has produced a Web site that offers more than 3,000 full-length TV episodes and 100 movies -- all available free.

Competition is already on the way from Warner Bros. Television Group which just announced plans for two ad-supported Web sites. One, TheWB.com, will feature Warner Bros. produced TV shows such as "Friends," "The O.C." and "Gilmore Girls." "O.C." creator Josh Schwartz and McG, who directed the "Charlie's Angels" films, have signed to develop new content for the site, said the studio. (Warner Bros., like CNN, is owned by TimeWarner.)

TheWB.com is set for a Beta launch in early May. A second WB site for kids will present animated programming from Looney Tunes, Hanna-Barbera and DC Comics, said Warner Bros.

The studios are merely following the viewers, who are increasingly watching video online. In the past year researchers tracked a seismic shift in the amount of video Americans watched on the Web -- up 66 percent, according to comScore. Americans watched 10 billion videos in the month of February alone, said the rating service.

"The numbers will climb even higher to huge levels in just a few years," said Adriana Waterston of the market research firm Horowitz Associates.

But how much of a threat -- if any -- is online video to the culture and technology of old fashioned television?

Free online video changes consumer viewing habits because it offers alternatives to TV. Even now, a 9-year-old boy in Georgia will turn to YouTube for new episodes of Japan's action anime "Naruto," which are unavailable on U.S. TV. In Indiana, a viewer who canceled her cable TV because she's fed up with multiple commercials can go online at CBS.com to watch "CSI" -- with fewer ads. On CNN.com, viewers can watch virtually every prepared report that now airs on CNN's TV networks.

Online video

Who's watching?

According to comScore, 72.8 percent of the entire U.S. Internet audience viewed online video in February.

Men ages 18-34 account for 40 percent of viewers who watch online video daily, according to Leichtman Research Group.

What are they watching?

In February, 80.4 million viewers watched 3.42 billion videos on YouTube, according to comScore. That's 42.6 videos per viewer.

In surveys, NBC and ABC are the networks Internet users mention most for online video, according to Horowitz Associates Inc. "Grey's Anatomy" is the most mentioned TV program.

Why are they watching?

Seventy percent of Internet users who watch TV online say it's because they missed the episode on regular TV, according to Horowitz Associates.

Since it launched three years ago, YouTube has championed amateur videos such as "lonelygirl15" and "Evolution of Dance." The Google-owned site now features professionally-produced video from CBS, TNT, the National Basketball Association and the royal families of Great Britain and Jordan.

"Yes, television is changing," said Kilar, "but I don't think TV is dying, because the television experience in the living room is a very good one -- and it's not going away."

Given a choice between a big TV screen and a computer monitor, TVfodder.com blogger Rachel Cericola prefers her video big. That's why she uses the Web only if she has to play "video catch-up."

"If I miss an episode of 'Lost,' " said Cericola, "sometimes I have to suffer" by going online.

While TV networks are adding more content online, at least one is going the other way. Sparking outrage throughout the teen blogosphere, the CW TV network has stopped posting new episodes of the network's third most popular show, "Gossip Girl."

Network executives hope to drive viewers of the episodes, which the CW said numbered in the hundreds of thousands, back to television.

"We thought -- as an experiment this season -- that we would withhold the streaming from our Web site so that you can only get the show on the CW's airwaves," said CW spokesman Paul McGuire.

Ratings were up last week for "Gossip Girl," the network said. And -- priced at about $2 a download -- the show was iTunes' No. 1 TV program this week.

As for the TV culture in a post-Internet age, Massachusetts Institute of Technology Web media researcher Geoffrey Long believes multiple video-delivery devices will fracture the traditional shared entertainment experience fostered by TV.

"You may be less likely to ask your co-worker if they'd seen the latest episode of [the Internet-based animation series] 'Homestar Runner,' " said Long. "But you can have the same conversation with friends on the other side of the planet."

Marketing experts say the model consumers want is a free service supported by limited advertising. Hulu's ads -- described by Kilar as "elegant" and "non-obtrusive" -- briefly greet viewers at the beginning of each TV episode and take up about two minutes for every 22 minutes of programming. That's only 25 percent of the standard TV commercial content.

No one knows for sure if -- someday -- the Internet will make TV obsolete. Such a scenario won't happen anytime soon, said Internet and media consultant Stuart N. Brotman, who echoed many other experts.

But delivering video online for a massive nationwide audience may happen eventually. Live streaming of the NFL's Super Bowl, watched by millions, although not technically feasible now, is not impossible, said Brotman.

"We may be close to a decade away," said Brotman. But a major technological hurdle, he said, would be improving the Internet infrastructure to allow it to push enough video data to fill millions of large, living-room sized TV monitors.

Apple and others have developed devices that aim to combine Internet and TV, but the perfect integrated TV-Web invention appears to be a long way off. Not that it wouldn't be popular, said Cericola.

"If somebody came out tomorrow with a cheap box that would let us watch TV and the Internet at the same time," she said, "people would buy it in a heartbeat."